Dividends and shares

[GlennLindley]

If two directors of a limited company both have even shares do they have to have even dividend distribution?

 

[David Griffiths]

In a word, yes.

It is technically possible to waive entitlement to dividends, but it is risky if not done properly.

 

[Bob]

Is there only one class of shares?

Is one shareholder prepared to waive their dividend? (David beat me to it !! )

If you are amicable and wish to have differing dividends, then it may be possible to re-arrange the share capital by issuing alphabet shares that rank pari passu but with differing dividend entitlements

 

[UKSBD]

Slightly off topic, but if they do have equal dividends can 1 then give the
other a lump some of cash without any tax implications?

 

[KM-Tiger]

Far as I know gifting is not taxed ... yet.

But there are tax implications, as the original recipient will still need to declare the dividend on their personal tax return.

Better if you want unequal dividends to have different classes of share.

 

[Chris Ashdown]

Small point dividends are for shareholders, nothing to do with Directors, you can be either or both, bu directors who are not shareholders do not get dividends

 

[Brsln2]

If the directors have equal ordinary shares then the distribution of the dividends must be equal as well. I remember once talking to a companies house officer and they told me that you can define a separate share- i.e shares B entitles 40% of the dividends. Best to speak to companies house.

 

[David Griffiths]

Companies House won't do that for you. You will have to alter the company's articles to define new share classes and their respective rights, passing the appropriate resolutions and filing a copy with Co Ho

Sure they'll tell you what you can do, but not how to actually do it.

 

[John Mansley]

Companies House have also stated explicitly on its website that they are not there to give specific advice on such matters. You should speak to your accountant - they'll be able to sort all of this out for you.